Australian Stock Market Report – Midday January 6, 2015

An office worker talks on his phone as he looks the stock board at the Australian Securities Exchange (ASX) building in central Sydney June 15, 2012. Asian shares edged up on Friday, and the euro held most of the previous session's gains, as nervous investors took comfort from plans for coordinated action by major central banks to stabilise markets if Sunday's election in Greece results in turmoil. Reuters

 Australian shares have had their worst start in a month with the ASX 200 Index down 1.8 per cent at lunch. The weakness follows concerns about the future of Greece within the euro zone, substantial losses across global markets and a 5 per cent slump in the oil price overnight.

 US shares had their worst session in three months while major European markets fell by as much as 5 per cent due to political jitters. Greece will be holding a general election at the end of January - with the potential outcome creating worries of a Greek exit from the EU.

 Energy and mining stocks are doing worst at midday, with oil and gas companies down by around 5.5 per cent.

The price of oil dipped below US$50/barrel for the first time in 5.5 years overnight, which is pushing the industry lower. Woodside Petroleum (WPL) is down 5.5 per cent while Santos (STO) is 7.9 per cent lower. Signs that oil production in Russia (the world's biggest producer of oil) and Iraq (seventh largest) are at their highest levels in decades is a weight on the industry.

 Mining stocks are falling by 3.3 per cent with the world's biggest miner, BHP Billiton (BHP) the single biggest drag. BHP is down 5.2 per cent and is accounting for 17 per cent of the total market's losses. The miner is the third biggest company on the ASX.

 Lynas Corp (LYC) is down 8.8 per cent following news that China has removed quotas limiting exports of rare earth minerals. China accounts for close to 90 per cent of global output and together with a cash shortage has been pushing LYC shares substantially lower in recent years.

 Gold stocks are the lone winners with safe haven buying of the asset overnight. Newcrest (NCM) is up 1.2 per cent. Despite improvements in the sub-sector; gold stocks only account for around 1 per cent of the local market.

 The Reserve Bank does not meet in January and will come together next to make a decision on interest rates on Tuesday 3 February.

 Volume has picked up with 592.7m shares traded worth $1.8bn. 196 stocks are up, 569 down and 246 are flat. Tuesday is likely to be the busiest day of the year so far.

 The Aussie dollar buys US$0.811, €0.679, ¥96.7 and £0.531.

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